At the latest COE tender which closed on Wednesday, premiums plunged across the board. But certificates of entitlement for car bore the brunt of the downturn.
COE for cars up to 1,600cc fell by 20.4 per cent to finish at $10,989, while COE for cars above 1,600cc tanked by 47.3 per cent to $7,589 - the lowest level in nearly two years.
Likewise, Open COE, traditionally a proxy for car COEs, fell by 20.3 per cent to end at $12,001.
Even the motorcycle premium took a beating, losing 14.8 per cent in value to $1,609.
Motor dealers said showroom traffic has slowed to a crawl in the past fortnight. And many buyers were downgrading to smaller cars, contributing to the sharp drop in the above-1,600 premium.
They reckon bargain hunters might rush in to prop up premiums in the next tender, but few expect prices to be as firm as they had been in recent months on account of the economic uncertainties ahead.
Motor dealers attributed the major correction to the global financial meltdown that is threatening to push the world into a prolonged recession.
Many reported thinner crowds at showrooms over the last two weekends.
Mr Mark Choong, chairman of Toyota distributor Borneo Motors, said the latest COE prices are 'a reflection of the economic situation around the world'.
'Replacing a car is not a priority these days,' he said.
He said big-car buyers are holding back the most because 'these people are the ones with money to invest, and they're currently more concerned with other things than buying a car'.
Industry watchers said buyers have already begun downgrading to smaller models, which is partly why COE for cars up to 1,600cc has not fallen as sharply.
They point out that Open COE is supported by commercial vehicle bidders, who face the biggest shrinkage in supply from this month. The quota for commercial vehicle COEs has contracted by 30 per cent.
Singapore Vehicle Traders Association secretary Raymond Tang said the economic downturn has also encouraged many people to buy used instead of new cars.
According to Land Transport Authority figures, used car sales in the July-September period averaged 2,538 a month - 20 per cent more than the corresponding quarter last year.
Motor traders are expected to reduce sticker prices in the next few days, but the cuts are not expected to match the COE falls.
Mr Tang said most traders are still coping with the rising yen, 'so I think they won't be able to cut prices much.'
The Japanese currency, which rose by more than 10 per cent to trade at 69 yen to $1 two weeks ago, is now firmer at 65 yen.
In any case, Mr Choong of Borneo said price cuts are unlikely to send buyers flocking to showrooms.
'Some people will come, but there won't be a big rush,' he said.
